18 April 2006

Ticket price comparison

The start of the baseball season is usually accompanied by two neat statistical news releases. Forbes Magazine's 2006 team valuation figures are not available, but Team Marketing Report's newest MLB Fan Cost Index is. It shouldn't come as a surprise that the elimination of the Coliseum's third deck led to a 25% increase in the average price of a seat. What is surprising is the fact that many teams with new stadiums are towards the bottom of the list. Granted, most of those teams (Detroit, Pittsburgh, Milwaukee) have been perennial cellar-dwellers in medium-to-small markets, but there appears to be a clear correlation between on-field success and ticket price. Baltimore and Seattle charged a hefty premium when their teams were more successful and their stadia were newer. As both went into the tank in the last few years, price hikes have been fewer.

To put things into perspective, here are a few more bullet points that you might find interesting:
  1. In 1999, the A's average ticket price was $10.10. That means that in seven years, ticket prices have gone up 118%.
  2. 1999 payroll was only $26 million. The current payroll is $62 million, a 138% increase. Pay-to-play is the name of the game.
  3. There's no better indicator of MLB clubs' revenue disparity than ticket prices. Ten years ago, Boston had the highest ticket price - $15.43. Cincinnati had the lowest - $7.95. Boston still holds the mantle of as ticket price champ, with its average price at $46.46. Kansas City now has the lowest - $13.71. There's also a multiplier effect because teams like the Red Sox, Yankees, and Cubs routinely sell their seasons out, as opposed to the oft-lackluster attendance records of the lower-revenue teams.
The Fan Cost Index is frequently cited by analysts and economists, but it tends to paint the fan experience with too broad a brush. Before his untimely passing, Doug Pappas wrote an article for Baseball Prospectus that deconstructed the FCI and sought to obtain more granular, circumstance-based data.

Now that the A's have raised ticket prices 25% over last season, what's in store for the remaining years on the Coliseum lease? And what can we expect when a new ballpark is opened? Will it have a China Basin-like pricing structure, or will it look like PNC Park's tiering system?


Jeff said...

So the closing of the third deck really comes down to squeezing more money out of those 25K dedicated fans who show up to the games? That's what the statistics seem to imply.

Georob said...

Many hard core A's fans are perfectly happy to buy their tickets at game time, enter an uncrowded stadium with about 15-20,000, sit pretty much wherever they want(within reason) and be able to see a lot of their friends.

Of course these same fans get upset when the team either misses or can't get far in the playoffs. And if the A's ever went into a 4 or 5 year stretch of below .500 play, I'd bet about half of them would disappear.

And now these same fans are whining that wherever the new stadium is, things will never be the same again. To you I say that I feel your pain, but only so much.

The truth is, you can't have it both ways. And the only reason you've had it this long is because Billy Beane is a genius when it comes to "stretching the dollar" But look around you, the rest of MLB is doing it different.

I agree with Rhamesis that there can be creative ways to accomodate the dedicated fans who don't wish to pay a lot of money to see a game. Hopefully, Lew Wolff will take that into consideration; but whatever the outcome it WILL never be the same again. The game has indeed changed.

I don't know to what extent the Anti-trust provision prevents this, but perhaps the long term solution is a new league or two. Not necessarily at par with the Major Leagues, but made up of veteran, younger, and other players who love the game and don't need a seven figure income.

Such an enterprise would be totally separate from MLB, unlike the current minor league system, and would far more affordable to families and working individuals.

Football, Basketball, Hockey, and Soccer have all seen "alternative leagues" come and go, and it's probably contributed to making the main leagues stronger. But the last time baseball had such a threat to it was almost 50 years ago when Branch Rickey wanted to start the Federal League. And MLB was able to stop that by promising to expand by four teams(which it did)

The time may be right for such a threat again.

jonclaude4 said...

Don't forget likely seat license fees in a new stadium.

Between A's vs. Giants seat price and license fees, got me worried too!

Marine Layer said...

Good point, jonclaude4. Wolff stated that seat licenses were off the table in Oakland, but they probably aren't in Fremont or anywhere else. It would reduce the number of housing units that would be needed to finance the ballpark.

Rob, MLB put certain rules into the ML Constitution to act as barriers of entry for any potential upstart leagues. The threat of the Continental League (not the Federal League) forced MLB to insert a clause in which any league could join MLB if they could demonstrate specific levels of patronage and had minimum stadium capacities. An independent league would lose tens if not hundreds of millions investing in its own product just to get to that level. It would also have to circumvent the minor league system by doing radical things like playing draftees right out of college or high school. The USFL route of overpaying for talent would be likely as well. The economics of today's pro sports simply won't allow it.

Anonymous said...

A dream of mine (albeit a pipe-dream) is to see a structure similar to European soccer leagues, where smaller clubs play in lower divisions with the possibility of promotion to the top flight. Also, there looms the threat of relegation to lower divisions. Couldn't they try that with some of the AAA clubs? Sacramento, Nashville, Memphis, Toledo, etc. could probably support "2nd division" teams on the cusp of promotion to the Big Leagues. They could at least give KC and Pittsburgh a run for their money.

jrbh said...

I've always had daydreams about the promotion/relegation thing too; among other things, it would be an incentive for the perennial losers to get off their ass.

But you should hear Europeans talk about money and sports. They make our complaints about the Yankees look like kindergarten stuff. The dirty little secret of European football is that they have an intense consolidation at the top of the richest teams. The entire bottom half of the English Premier League is probably further from winning a championship than the Kansas City Royals are right now. The money teams, Man U, Chelsea, Real Madrid, Ajax, Juventus, etc., are dominant year in and year out, with no end in sight.

You could only do the relegation/promotion thing in a sport where TV and ancillary revenue, and not gate revenue, is the main source of income for the clubs. Otherwise, Sacramento, Memphis and Tucson, say, could get promoted to the big leagues in a year in which Pittsburgh, Kansas City and Tampa Bay get relegated, but once they got there, how could the three AAA cities with their 14,000-seat stadiums possibly hope to compete in the big leagues against the Yankees and Dodgers and Red Sox?

And then there's this: Sacramento has a promising, 21-year-old kid pitcher. It's the last game of the AAA season. They're playing Salt Lake, and if the River Cats win, they get promoted to the big leagues. It means scores of millions of dollars. You think they're going to protect that kid's future, or do you think they're going to pitch him until he drops and take the money and run?